Correlation Between John Wood and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both John Wood and Fair Oaks at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining John Wood and Fair Oaks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Wood Group and Fair Oaks Income, you can compare the effects of market volatilities on John Wood and Fair Oaks and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in John Wood with a short position of Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Wood and Fair Oaks.
Diversification Opportunities for John Wood and Fair Oaks
Pay attention - limited upside
The 3 months correlation between John and Fair is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding John Wood Group and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income and John Wood is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on John Wood Group are associated (or correlated) with Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of John Wood i.e., John Wood and Fair Oaks go up and down completely randomly.
Pair Corralation between John Wood and Fair Oaks
Assuming the 90 days trading horizon John Wood Group is expected to under-perform the Fair Oaks. In addition to that, John Wood is 12.45 times more volatile than Fair Oaks Income. It trades about -0.01 of its total potential returns per unit of risk. Fair Oaks Income is currently generating about 0.07 per unit of volatility. If you would invest 55.00 in Fair Oaks Income on December 28, 2024 and sell it today you would earn a total of 2.00 from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
John Wood Group vs. Fair Oaks Income
Performance |
Timeline |
John Wood Group |
Fair Oaks Income |
John Wood and Fair Oaks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with John Wood and Fair Oaks
The main advantage of trading using opposite John Wood and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Wood position performs unexpectedly, Fair Oaks can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fair Oaks will offset losses from the drop in Fair Oaks' long position.John Wood vs. Ashtead Technology Holdings | John Wood vs. Playtech Plc | John Wood vs. Wheaton Precious Metals | John Wood vs. Silvercorp Metals |
Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Newmont Corp | Fair Oaks vs. Baker Hughes Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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